Ten Principles for Creating Value from Local Government Property

Local authorities in the UK are responsible for around £130 billion of real estate. Arguably, this asset base represents the largest untapped resource in local government.
August 6, 2006, 7am PDT | Chris Steins | @urbaninsight
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This Ten Principles publication, the first of a new series on local authority property, focuses on local authorities' operational estates: the buildings from which they coordinate and deliver public services.

Rethinking the need to hold and occupy extensive property estates offers local authorities not only the opportunity to access capital, but also, potentially, a basis for fundamentally changing the way local government does business and engages with its staff, stakeholders, and citizens. Given the growing pressure on local government for higher-quality services at lower cost, there is merit in exploring whether property assets can increase efficiency and productivity. While performance and process improvement through active management of existing estates will continue to deliver value, this publication considers whether large-scale portfolio transactions -- which are only just starting to emerge in local government -- can help achieve a fundamental change in creating value.

'Creating Value from Local Government Property' is based on a two-day workshop and numerous case studies. The focus is on best practices for creating value from local government property in the U.K., which is the source of most of the examples. Nevertheless, many of the messages will resonate across continental Europe.

The publication takes as its backdrop a number of major themes, such as the interaction between public and private sector partners to achieve an authority's goals, and the use of technology to help achieve operational efficiencies and greater productivity.

Chapters include:

  • Rock the Boat
  • Find Your Champions
  • Capture the Vision and Define the Need
  • Optimise Commercial Leverage
  • Listen, Engage, and Act
  • Make It Happen
  • Engage the Private Sector Early
  • Understand the Partner’s Culture
  • Design for the Future
  • Make a Big Splash

From the report, Case Study: Birmingham City Centre:

"If you need a good example of making a splash, look no further than Birmingham’s celebrated retail renaissance. The phased redevelopment of 40 acres of Birmingham's city centre has revived its jaded retail sector and released the heart of the city from the grip of 1960s concrete monstrosities.

The Birmingham Allianceâ€"a partnership between Hammerson, Henderson Global Investors, and Land Securitiesâ€"has completed two major phases of the development.

The 17,186-square-metre Martineau Place opened in 2001, and the £500 million Bullring opened in 2003, providing more than 110,000 square metres of retail space in 140 shops. Martineau Galleries, the final phase, is now seeking planning consent for a 266,000-squaremetre mixed-use development in the east of the city centre.

The big splash from this project has been economic: the £800 million investment in the economy created 8,000 jobs. In its first year, the Bullring received 36.5 million visitors, 6.5 million more than expected. The impact has extended beyond retail: office developers are now looking at sites in Birmingham, in order to be close to the Bullring.

The development has also raised the bar for cities embarking on bold and contemporary design initiatives; the curvaceous silver Selfridges building, designed by Future Systems, quickly became an internationally recognisable icon.

Birmingham Council’s desire for a dramatic solution helped provide the vision for this major redevelopment. Former council leader Sir Albert Bore is also credited with playing a role in bringing together the three developers to work together. Initially, Hammerson and a partnership between Land Securities and Henderson were working on two competing schemes for the city centre.

Plaudits for the scheme include the 2004 Urban Land Institute Award for Excellence. It was the first time the award was given to an entire city."

From Chapter 10, Make A Big Splash:

"Great buildings and good design can catalyse community regeneration and foster civic pride. Bad design can destroy them. Local authorities should be bold in their property transformations, using them as an opportunity to create something of value for the community.

Part of the value of redesigning property commitments to catalyse and support service-delivery improvements will come from an authority’s ability to adopt a holistic approach. Taking a portfolio perspective enables a council to leverage its buying power, achieve real change in the way its does business, and positively shape the physical environment.

The regenerative effect of property decisions should not be underestimated. Local authorities should act as role models, investing in -- and insisting on -- good design and high-quality buildings. This approach helps create 'a big splash' by attracting other high-quality development to the area."

[Editor's note: The link below is to a 3MB PDF document.]

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Published on Monday, July 31, 2006 in Urban Land Institute
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